Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for November 27th, 2012

Today, in surprising fashion, the Venezuelan National Assembly authorized President Hugo Chávez to seek treatment for his ailments in Cuba, under Article 235 of the Venezuelan Constitution which says that any absence of more than five days from the country has to be approved by the Assembly. This is different than a temporal absence, in which the Vice President replaces him. (Art. 234), which Chávez has refused to do ever since he started receiving treatment in Cuba for his mysterious ailment.

According to the letter sent by Chávez to the National Assembly, he will receive treatment in a hyperbaric chamber for “oxygenation”, a treatment which according to the American Cancer Society is used for treating bone damage caused during radiation treatment or to treat infections of soft tissue which are causing necrosis. Chávez has said that he has received chemotherapy, but has never formally acknolewdged being treated with radiation, although there are rumors that this was the first type of treatment he received when the cancer was first discovered.

The timing is certainly unconventional, to say the least, as there will be important Gubernatorial elections on December 16th. So far Chávez has been absent for most of the campaign, reducing his appearances in public since he won the Oct. 7th. Presidential election, as can be seen in this graph published by El Universal today:

Notice that Chávez has been absent publicly since about fifteen days ago and now he makes no public appearance to request the leave or as he is leaving the country. Reportedly, he is unable to walk more than a couple of steps at this time. Additionally, the request to be absent from the country was approved at an ordinary session of the National Assembly to “celebrate” the 20th. anniversary of the second coup that took place in 1992 and not one scheduled for the approval sought..

There are two important considerations at this time. First, the President of the National Assembly Diosdado Cabello read the letter, but also announced Chávez would be here on Jan. 10th. to be sworn in as President, suggesting that he will not be here for the remainder of the campaign. This certainly will benefit the opposition, as Chávez personally will not be present to endorse his hand-picked candidates. Additionally, the electorate largely believed that Chávez had been cured from his cancer, with polls suggesting 80% of his voters believed the illness was not a factor to consider in the decision. This could benefit the opposition since the Oct. 7th. election proved once again that it is Chávez that gets out the votes and generates excitement in the Venezuelan voters.

But more importantly (or ominously) it creates a number of possible scenarios which could complicate things in the next few months, depending on whether Chávez ‘condition represents an acceleration of the cancer he is suffering. First of all, if there was an absolute absence of the President elect before he is sworn in, Article 233 of the Venezuelan Constitution says that the President of the National Assembly (Diosdado Cabello) will become President and elections would take place within 30 days. If the absence were to take place after Chávez is sworn in on January 10th. , then the Vice-President (Nicolas Maduro) would take his place and elections would also have to take place within 30 days. Note that Chávez would have to appear to be sworn in on Jan. 10th. in this scenario, as he has to name a new Vice-President after being sworn in.

For Chavismo, this creates a complex situation, in which the party would have to choose a candidate within days, something which would be traumatic, to say the least, unless Chávez personally designated a successor, something that so far he has refused to do during his year and a half sickness. The opposition, on the other hand, is likely to choose Henrique Capriles after his pereormance against Chávez in the recent Presidential race.

Venezuelan dollar bonds rose sharply when the news was announced today, with most issues reaching historical high values. Investors clearly were betting once again that change may be in the air in Venezuela and a more reasonable economic policy will be implemented, independent of the side that wins were Chávez to suddenly disappear from the Venezuelan political scene.